Marconi in £391m takeover deal

Telecoms group Marconi has swooped to become a major player in the fast-growing mobile phones market through the £391m acquisition of MSI, a consultancy and software house specialising in the wireless sector.

Marconi, which last year shed its historic past as the electrical engineering giant GEC, has most of its expertise in fixed-line telecoms technology and is keen to up its presence in the higher-value niches in the wireless sector.

Ten-year-old MSI, which is more than 90%-owned by venture capital group General Atlantic Partners, specialises in consultancy and network services software for wireless operators. It has around 100 mobile network operators in 60 countries among its clients, including Vodafone AirTouch, Sprint PCS, AT&T Wireless and SingTel Mobile.

Marconi finance director John Mayo said the new addition to the Marconi stable would complete the group's services portfolio allowing it to offer customers the full range of expertise across the fixed and wireless telecoms spectrum. MSI is expected to benefit from the development of the third-generation mobile networks in Britain.

In the year to end 1999 MSI had revenues of £58m and in the first quarter of this year its revenues increased 38% to £10m. It has a gross margin of 55% and is breaking even before interest and tax.

MSI's 600 telecoms professionals, led by chief executive Tom Butler and finance director Derek Meades, are being locked in through a huge options package worth up to £179m.

Marconi chief executive Lord Simpson said: 'I am confident that the sales synergies we realise will be multiples of MSI's current revenues. MSI takes Marconi further up the value chain.'